How Long Is the FAR Exam? Structure, Content, and Strategy

The Financial Accounting and Reporting (FAR) section is a foundational component of the Certified Public Accountant (CPA) examination. It assesses a candidate’s understanding of financial accounting and reporting frameworks used by various entities. The FAR exam covers a broad spectrum of accounting and reporting, establishing its reputation as a challenging and extensive part of the CPA Exam.

FAR Exam Structure

The FAR exam is four hours long, providing candidates a structured environment to demonstrate their accounting knowledge. It consists of two primary question types: multiple-choice questions (MCQs) and task-based simulations (TBSs).

The MCQ portion comprises 50 questions, presented in two testlets. These questions test a broad range of concepts, requiring candidates to recall accounting rules, apply principles, and perform calculations. Some MCQs are “pre-test” questions, which do not count towards the candidate’s score but are included for future exam development.

Following the MCQ sections, candidates encounter seven task-based simulations (TBSs), presented in three testlets. TBSs are complex scenarios that require candidates to apply accounting knowledge in a practical setting. These simulations often involve tasks such as preparing journal entries, reconciling accounts, researching authoritative literature like the FASB Accounting Standards Codification, or completing financial statements. Some TBSs may also include pre-test questions that do not impact the final score.

The exam includes an optional 15-minute break after the third testlet, which is the first TBS testlet. This break pauses the exam timer, allowing candidates to step away from their workstation before proceeding with the remaining simulations. Utilizing this break can help manage mental fatigue.

Content Areas Tested

The FAR exam encompasses a wide array of topics in financial accounting and reporting. A deep understanding of the Financial Accounting Standards Board (FASB) Accounting Standards Codification is fundamental. This comprehensive body of authoritative U.S. Generally Accepted Accounting Principles (GAAP) serves as the primary source for financial reporting rules in the United States.

One significant area is the Conceptual Framework, Standard-Setting, and Financial Reporting. This section tests knowledge of financial reporting objectives, qualitative characteristics of financial information, and financial statement elements. It also covers the roles of standard-setting bodies, including the FASB and the Securities and Exchange Commission (SEC). Understanding the differences between U.S. GAAP and International Financial Reporting Standards (IFRS) is also included.

The exam further delves into Select Financial Statement Accounts, requiring detailed knowledge of assets, liabilities, and equity. This includes topics such as cash and cash equivalents, accounts receivable, inventory costing methods, property, plant, and equipment (PP&E) including depreciation, investments, intangible assets, accounts payable, various forms of debt, and shareholders’ equity. Proper recognition, measurement, and disclosure for these accounts are assessed.

A substantial portion of the exam addresses Select Transactions, covering complex accounting events that impact financial statements. This involves revenue recognition principles, accounting for leases, income taxes, business combinations, derivatives, and foreign currency transactions. Each of these areas requires specific application of GAAP.

State and Local Governments represent another content area, focusing on accounting and financial reporting standards set by the Governmental Accounting Standards Board (GASB). This includes understanding governmental accounting aspects like fund accounting and preparing government-wide financial statements. Candidates must differentiate between governmental, proprietary, and fiduciary funds, applying specific measurement focuses and bases of accounting.

Finally, the FAR exam covers Not-for-Profit Entities, which follow specific FASB standards. This section examines how these organizations classify net assets, report revenues, and present functional expenses. Understanding the differences in financial statement presentation for not-for-profit entities compared to for-profit businesses is also part of this content area.

Strategic Time Management

Effective time management is paramount for successfully completing the FAR exam within the allotted four hours. Candidates should approach the examination with a strategy for allocating their time across multiple-choice questions (MCQs) and task-based simulations (TBSs). A general guideline suggests dedicating approximately 1.5 minutes per MCQ, which allows for about 75 minutes to complete both MCQ testlets. This leaves a significant portion of the exam time for the more complex TBSs.

When tackling MCQs, read each question carefully before reviewing answer choices. If a question is challenging, candidates can flag it for later review and move on. Employing the process of elimination helps narrow down options, increasing the likelihood of selecting the correct answer. Returning to flagged questions after completing a testlet allows for a fresh perspective.

The task-based simulations demand substantial time, with each of the seven TBSs typically requiring 30 to 45 minutes. Before attempting a TBS, candidates should thoroughly read the instructions and review all provided exhibits to grasp the scenario and requirements. Breaking down complex tasks into smaller, manageable steps can make the simulation less daunting.

Utilizing the authoritative literature, such as the FASB Accounting Standards Codification, which is accessible within the exam interface, is a strategic move for many TBSs, particularly research-based simulations. Candidates should practice navigating this resource to efficiently locate relevant guidance during the exam. Timeboxing, or allocating a specific maximum amount of time for each TBS, helps prevent excessive time expenditure.

The optional 15-minute break, available after the first two testlets, should be used strategically to rest and refocus. Taking a short mental break can improve concentration for the remaining TBSs. Consistent practice with timed mock exams during preparation helps candidates internalize these time management strategies.

Exam Day Experience and Scoring

The FAR exam day begins at a Prometric testing center, requiring candidates to adhere to specific check-in procedures. Upon arrival, candidates must present two forms of identification; one must be a valid, government-issued photo ID, such as a driver’s license or passport. Security protocols, including a palm vein scan and a signature verification, are standard to confirm identity before entering the testing room. Personal belongings, including phones and bags, must be stored in provided lockers outside the testing area.

Once inside the testing room, candidates are assigned a computer workstation in a quiet, monitored environment. Each workstation provides a computer with the exam interface, a calculator, and a dry-erase board with markers for scratch work. Proctors continuously monitor the testing area to ensure exam integrity. Candidates can request new scratch boards if needed during the exam.

Navigating the exam interface is straightforward, allowing candidates to move between questions, review previous answers, and access the authoritative literature for TBSs. The timer is displayed on screen, helping candidates manage their progress. After completing all testlets, candidates confirm their submission, and the exam concludes.

The FAR exam is scored on a scaled basis, with a minimum passing score of 75 required. This score is a weighted average that considers the difficulty of the questions answered correctly. Both MCQs and TBSs contribute significantly to the overall score, with each typically accounting for 50%. Pre-test questions are not factored into this score calculation.

Scores are typically released according to a schedule published by the American Institute of Certified Public Accountants (AICPA), usually within a few weeks after the exam window closes. Candidates access their scores online through the candidate portal of their respective Board of Accountancy. If a candidate does not achieve the minimum passing score, they can re-take the exam, though a waiting period and re-application process are generally required.